[ToC]
Following is a Web version of a document from USAID's 1997 Congressional Presentation. Please note that some formatting may have been lost in the automated conversion of the original file. This document is also available for download in its original WordPerfect 5.1 format.

EUROPE AND THE NEW INDEPENDENT STATES

FY 1997 Assistance to Central Europe $475,000,000
FY 1997 Assistance to the New Independent States $640,000,000
FY 1997 Economic Support Fund $94,600,000
FY 1997 Development Assistance Fund $5,700,000
FY 1997 P.L. 480 Title II $25,000,000

INTRODUCTION

National security interests of the United States require that the nations of the former Eastern bloc and Soviet Union complete their transitions to peaceful democratic rule and market economies. USAID was quick to respond to the unique foreign policy challenges brought on by the unprecedented transformation of Central Europe1/ and the New Independent States (NIS) of the former Soviet Union. In just seven years in Central Europe and four in the NIS, the U.S. assistance program has helped jump start the development of market democracies. Democracy has clearly taken root in most of Central Europe, and the private sector now dominates economic activity in most states there. Historic changes have occurred in the NIS from development of independent media and grass-roots organizations giving voice to citizens, to massive private sector ownership and entrepreneurship. A significant start has been made in creating the institutions and systems which permit the rule of law and nurture private initiative. The U.S. Government has made an impact. It is now crucial that the United States help these nations consolidate these changes and make them irreversible.

Program Management

U.S. assistance programs in Europe and the New Independent States are uniquely structured to meet U.S. foreign policy challenges. Assistance programs are overseen by two legislatively mandated State Department coordinators, one for the New Independent States under the FREEDOM Support Act (FSA) and the other for Central Europe under the Support for East European Democracy (SEED) Act. This oversight is intended to ensure coordination of policy and development decisions in this relatively new and critically important region, and to promote synergy among U.S. Government assistance programs. USAID manages the largest portion by far of U.S. assistance to the region. In addition, a dozen other U.S. Government agencies implement programs financed through the FSA or SEED resources. A major element of assistance to Russia, the Gore-Chernomyrdin Commission, is under the direct leadership of the Vice President.

U.S. NATIONAL INTERESTS AND PRIORITIES

The outcome of the political and economic changes now underway in Central Europe and the New Independent States clearly affects vital U.S. interests.

The tremendous benefit to U.S. national security interests of a Russia that has moved away from confrontation is a sufficient reason for the United States and its Western allies to continue to aid that country's difficult evolution toward a market-oriented democracy. In addition to helping avoid potential future threats to U.S. security, the USAID assistance program is creating new and expanded trade and investment opportunities for American business.

Political and economic reforms pursued by governments across Central Europe and the NIS have already yielded significant, tangible benefits.

  • Diminished security threat. The United States and our European allies face a dramatically diminished security threat as a result of the end of the Cold War and accompanying steady progress in reducing nuclear and conventional arsenals.

  • Peace Dividend. The end of the East-West rivalry has freed up resources for investing here at home to bolster U.S. international economic competitiveness and improve U.S. economic well-being. The "peace dividend" --estimated to be as high as $250 billion in reduced defense costs since 1990-- permits greater focus on domestic needs.

  • Democratic Expansion. Throughout much of the region, elections -- for parliaments, for presidents, for local governments -- have been deemed "free and fair" by neutral domestic and international observers. Citizen participation and empowerment are further evidenced through hundreds of active non governmental organizations (NGOs) across the region, including free trade unions and human rights organizations. Most Central European and NIS citizens are informed by free print and broadcast media, which are expanding the "marketplace of ideas" and growing into a reliable check on government power through critical, independent reporting.
  • New market development. U.S. trade with the region has more than doubled in the last decade and has the potential to multiply several fold in the coming years, translating into well-paying export-related jobs. Private U.S. investment, previously non-existent, is well over $10 billion.

  • Regional Security and Cooperation. The countries of Central Europe and the former Soviet Union are cooperating to build new security arrangements to promote peace and economic prosperity and are working closely with the United States to address regional and global problems.

    Development Challenges

    Central Europe and the New Independent States pose a wide variety of unique challenges to U.S. global assistance policy of promoting sustainable development. These are not underdeveloped countries, but rather they have been misdeveloped and are out of sync with international market forces. The challenge is not to develop human and physical infrastructure, as educational levels are for the most part relatively high, and lack of physical infrastructure is generally not the major obstacle to growth. The task is rather to assist these countries with the intellectual concepts needed to redirect their resources toward open and participatory political and economic systems. The need in most countries is not for a protracted program of economic assistance, but for strategically targeted support during a critical period of economic and political transition, followed by an appropriate phaseout. The challenges vary widely among Central Europe's northern and southern tiers, Russia, Ukraine and Central Asia, and the conflict-torn areas of the Caucasus and Tajikistan. Each nation faces a different set of circumstances, some requiring only brief transitional assistance, others humanitarian and conflict resolution support, while some face longer-term development challenges.

    The Dayton Accords present a unique opportunity to help build durable peace in Bosnia-Herzegovina. The U.S. Government is committed to stabilizing the post-war situation and providing a foundation for economic revitalization and the establishment of effective political and constitutional institutions. The U.S. Government also is committed to helping meet remaining humanitarian needs. Of the proposed funding for Central Europe, USAID plans to provide $200 million to continue activities begun in FY 1996 to respond to these extensive challenges. The bulk of these funds will support reconstruction finance, municipal infrastructure and services, and economic and democratic technical assistance programs. The remaining funds will support police training and monitors to promote security and stability; demining support to address the significant threat of mines to security and reconstruction; and administrative costs associated with implementation of the program. Reconstruction finance focuses on fast-disbursing commercial loans and quick-impact micro-lending. USAID's municipal infrastructure and services program provides infrastructure rehabilitation, housing repair and small business development. Economic technical assistance in the areas of macroeconomics, budget and fiscal, banking sector and privatization will help lay the foundations for economic recovery. Democracy programs will focus on building civil society and strengthening democratic institutions such as the media, the judiciary and government administration. In addition, USAID also proposes $25 million in P.L. 480 Title II for Bosnia. Due to the rapidly evolving situation in Bosnia, USAID will retain some programming flexibiity to respond to other needs that may arise.

    ACHIEVING RESULTS

    The USAID program pursues three strategic goals in this region: economic restructuring, democratic transition and social stabilization.

    Economic Restructuring.

    USAID has played an instrumental role in achieving sweeping economic changes, including mass privatization, land privatization, banking systems and energy sector restructuring. Establishment of private property rights and the growth of entrepreneurship have given ordinary citizens a stake in the new economic system. Most countries have made systemic changes such as creation of laws and institutions to permit private business, as well as specific changes in practices such as adopting Western accounting principles and banking practices. Some successes in the overhaul of these previously command-based economies include the following:

  • In the Czech Republic, virtually all small and medium enterprises are in private hands. The Ministry of Privatization will be dismantled by June 1996, having completed its task and facilitated $4 billion in investment transactions during six years with $22 million in assistance from USAID.

  • Mass privatization in Russia, which was successfully completed in July 1994 with U.S. assistance, resulted in one of the largest transfers of state-owned assets to the private sector in history and in the creation of over 40 million new shareholders. Today over 60% of gross domestic product (GDP) is generated by the private sector, and almost 50% of Russia's workers are employed in private firms -- almost three times as many as in 1992.

  • USAID technical assistance facilitated the opening of the Central Asian Stock Exchange in Almaty, Kazakstan in April 1995, and the establishment of an independent Securities Commission. These are important steps in the development of secondary financial markets in the country.

  • Ukraine's thermal power sector is being rapidly transformed from a state-owned monopoly to a competitive private system. USAID assistance helped break down eight mammoth monopolies and reconfigure them into a system of over 33 leaner companies. In addition, U.S.assistance helped create a National Electricity Regulatory Commission, the first of its kind in the NIS, to regulate retail tariffs and ensure fair competition.

  • Important advances in market reforms are taking place. In Poland, the private sector now accounts for over 56% of GDP. Rapid private sector growth drove expansion of the Polish economy by 5% in 1994 and is about 6% in 1995. In Hungary, the private sector is approaching 60% of GDP, with private sector exports being a major factor in 1995's GDP growth of 3%. The Albanian economy remains the fastest growing in the Central Europe region, with 7% growth expected in 1995, and annual inflation dipping into the single digits.

  • In Kazakstan, which energy analysts believe holds a substantial portion of the world's fossil fuel resources, USAID assistance strengthened the oil sector management control systems, and influenced relevant oil and gas laws, tax codes and export policies. Control systems reforms are helping the World Bank to attract investors for the Zen oil field, currently the largest producing field in the country.

  • USAID has provided agribusiness development grants to U.S. companies that establish joint ventures and create elements of a private food system in the NIS. USAID commitments of about $32 million for these grants are being matched by over $160 million in U.S. company investment -- a ratio of 5:1, well above the target level of 2.5: 1.

  • USAID-sponsored grantees helped Russian reformers develop a new Russian Civil Code which has been hailed as the most important Russian document of the last decade. Parts I and II of the Civil Code are judged to be as important to the economic system as the constitution is to the political system. The code spells out in detail the elements of law essential to market systems: contracts, insurance, liability, torts, leasing, loans and credits, transportation, labor contracts and securities. Similar codes based on the Russian example were adopted in Kazakstan and the Kyrgyz Republic. Armenia and Georgia are using the Russian Civil Code as the basis for writing their own laws. Implementation mechanisms and enforcement will be critical to make the rule of law an everyday reality, but this new code is the cornerstone to letting businesses and individuals work under predictable, transparent and fair processes and procedures.

    Democratic Transition.

    Democratic governance is critical to these formerly single party authoritarian states. During the period of communist rule, there was widespread abuse of civil and human rights and little access to information or citizen participation in political decision-making. Now free and fair elections are being held across the region, governments are being decentralized, independent media access is making information available and increasing governmental accountability, and NGOs are attracting support and influencing policy as they help articulate citizens' needs.

  • In Ukraine, materials provided by the USAID-funded Parliamentary Development Program on budget systems and processes provided the basis for the enactment of the July 1995 Revised Budget System Law, which allows for the reform of budget and budgetary control processes, including the development of an auditing control body similar to the U.S. General Accounting Office.

  • In Georgia, USAID is facilitating greater parliamentary transparency and independence enabling elected officials to develop reform-oriented policies and laws as a co-equal branch of government. USAID-funded Internet access to U.S. and international legal resources supported the drafting of the Georgian constitution and will continue to aid the country's legal infrastructure development. This project had the additional benefit of addressing one of Georgia's major obstacles to further reform, its collapsed communication infrastructure.

  • USAID assistance in Central Europe's southern tier has helped citizen advocacy groups launch vigorous non-partisan voter drives and poll-monitor training programs, which boost participation and guarantee transparency. As a result, voter turnout in Bulgaria's December 1994 election was a strong 72%. In Albania, civic vigilance by USAID-trained NGOs helped discover and resolve problems in recent municipal by-elections; the subsequent run-off elections were free and fair.

  • USAID funding has helped establish an alternative TV news distribution system in the NIS. In 1995, many of the stations involved in this system gave viewers their only exposure to objective information on the war in Chechnya.

    Social Stabilization.

    When social dislocation is ignored or inadequately addressed, citizens suffer. Citizens associate their plight with reforms, and in some cases have used their newly acquired voting rights to re-elect former communist leaders who exploit these concerns. Neither USAID nor other donors can finance social "safety nets," but the agency can provide targeted technical assistance to strengthen the countries' own social protection systems. For example, helping Ukraine, Russia and Slovakia to move away from virtually free housing for all to market-based rents and maintenance fees has improved the quality of housing while freeing municipalities' resources for targeted subsidies for the most vulnerable groups. USAID also has played a major role in alleviating suffering caused by civil strife, particularly in the Caucasus, Tajikistan and Bosnia.

  • USAID-funded health reform programs in Russia, Central Asia, and Ukraine improved efficiency in 1995 by introducing new reimbursement systems and encouraged facilities to adopt merit-based pay for health providers. This program encourages the development of private medical practices: this year, nine Russian and 16 Kyrgyzstani primary care practices opened, serving as models for others.
  • In Russia, the Rational Pharmaceutical Management program is helping to reduce waste, and improve resource allocation, use and managerial efficiency. The program already has helped regional authorities save scarce resources through competitive procurement of pharmaceuticals; prepared the first restrictive drug formulary, which led to the removal of 1,500 costly, unsafe or ineffective drug products from the market; and demonstrated how private sector community pharmacies can improve their performance.

  • USAID support helped 600 long-term unemployed Hungarians return to work through a USAID/ U.S. Department of Labor pilot labor project. Twelve additional project sites have been activated to address mass layoff issues and to counsel an estimated 5000 unemployed workers.

  • The USAID program in Bosnia-Herzegovina is meeting humanitarian needs, such as safe winter heating for 132,000 Sarajevans. USAID also is laying the foundation for post-peace programs, such as an infrastructure repair activity which promotes ethnic reconciliation.

  • USAID-provided assistance has led to the leveling off of diphtheria epidemics in Ukraine and Russia. With assistance from the U.S. Centers for Disease Control and Prevention and USAID-funded organizations, diphtheria control models have been established which will be replicated in other parts of the NIS.

  • Supplemental food assistance was provided to the most economically vulnerable pregnant and lactating mothers and small children in Armenia and Georgia. Food and transport funding was provided to refugees and internally displaced persons through the World Food Program in Azerbaijan and Tajikistan.

    Donor Coordination

    Donor coordination has allowed the United States to leverage hundreds of millions of dollars for the region and to obtain the maximum benefit from limited resources. USAID coordinates its activities with the World Bank, the European Bank for Reconstruction and Development (EBRD), and the European Union's (EU) technical assistance programs for the NIS (TACIS program) and Europe (PHARE program), as well as through the recently launched Transatlantic Initiative with the EU. USAID's technical assistance often has set the stage for World Bank and EBRD work in energy, housing, and social sector restructuring loans. For example, USAID's analysis of the Armenian energy sector paved the way for World Bank lending for a major power plant construction program, and in Russia, a USAID housing technical feasibility analysis led to a $400 million World Bank loan. The USAID-funded Polish-American Enterprise Fund has attracted over $100 million in leveraged capital from the EBRD, Creditanstalt Bank and private investors to establish the Polish Private Equity Fund, and another $50 million will soon be forthcoming from the EBRD in support of the country's mass privatization program. USAID and EU-TACIS meet regularly to coordinate at both the strategic and project levels. The U.S.-EU Transatlantic Dialogue Initiative provides a permanent consultative mechanism.

    In Bosnia-Herzegovina, European contributions for humanitarian assistance throughout the war greatly exceeded the $1 billion of the United States. Now, following the Dayton Peace Accords, the international community is working closely on all aspects of economic recovery, in full coordination with the North Atlantic Treaty Organization (NATO) Implementation Force (IFOR) mission. The U.S. contribution is expected to be 20% of the total World Bank estimate of bilateral aid needs, while the European Union and its member states will contribute the lion's share of these needs over three years. The London Peace Implementation Conference established the Office of the High Representative and vested him with overall responsibility for civilian coordination. The Brussels donors' conference served to coordinate pledges from bilateral and international financial institutions.

    Resource Allocation and Phaseout Considerations

    Country strategies concentrate on core reform areas that are fundamental to creation of democratic market economies. The pace of the transition will continue to vary from country to country, but the ultimate goal of U.S. assistance will be constant: to put in motion a process of fundamental and self-sustaining change, to assess reformers and then, with progress well-established, to phase out assistance rapidly. The extent to which systemic reforms are in place is one factor in determining resource allocations and in determining phase-out strategies. Other considerations include host country performance, effectiveness of USAID assistance and U.S. foreign policy interests. Countries will be assessed individually and flexibly. A very good performance record may indicate more resources should be applied because they can be used effectively to achieve solid results; it could also indicate a country is ready to be considered for phaseout. For example, the Czech Republic has been so successful in completing the transition to a private sector-driven market democracy, that the Czech Ministry of Privatization will close down this summer: USAID recognizes this and many other indicators of progress, and is completing its program there.

    Central European countries vary widely in their places on the transition continuum; some have achieved a solid base for market democracies to flourish without continued U.S. technical assistance, and are ready to phase down or out over the next few years. Estonia is an example of a well-consolidated market democracy; its last year of new funding for bilateral USAID technical assistance was FY 1995. Latvia and Slovenia, like the Czech Republic, have been similarly successful in creating the basic structures for market democracies. They will receive their last bilateral funds for U.S. technical assistance in FY 1996. Across the Northern Tier of Central Europe, progress in private sector growth and democratic transition is well advanced. Northern Tier states should not require U.S. technical assistance beyond the turn of the century. USAID will concentrate its efforts there on focused technical assistance to consolidate these systemic gains and make them permanent. Simultaneously, USAID anticipates gradually shifting resources to the Southern Tier, where reform challenges requirelonger-term engagement. Albania, the poorest country in Europe, faces a more traditional set of development challenges and may require assistance for a longer period. Bosnia-Herzegovina is a special case, requiring massive international support as it emerges from conflict. The United States has pledged support for a three year international effort of reconstruction and reconciliation over the FY 1996-98 period, and proposes $200 million in FY 1997 SEED resources for this purpose.

    In the NIS, progress in achieving fundamental reform also has been uneven and the transition challenge in general remains considerably greater than in Central Europe. Economic reform has generally outpaced democratic change. In some cases, such as Russia, the economic reform effort has progressed far enough to begin phasing down technical assistance. A combination of factors, including declining resources, changing conditions in the NIS, and improved reform climates in some countries has led to a shift of emphasis away from Russia toward Ukraine and Armenia. In FY 1994, two-thirds of NIS assistance went to Russia; in FY 1996 and FY 1997, the proportion is about one-fourth. The Ukraine and Armenia programs are growing considerably, while solid, but smaller programs will be maintained in Kazakstan, Kyrgyzstan, Moldova and Georgia. Although very significant work still lies ahead before stable market democracies will be fully functioning anywhere in the NIS, the primary responsibility rests with the countries themselves. U.S. assistance programs are of short duration. Most technical assistance programs in Russia should end within three years, and in other NIS countries, within five to seven years.

    External Debt

    In 1991, Russia assumed full responsibilities for all foreign assets and debts of the defunct Soviet Union. Thus, most countries of the former Soviet Union other than Russia did not initiate international borrowing programs until 1992. The total debt stock for these countries, excluding Russia, increased from about $1 billion in 1992 to just under $9 billion by 1993, including borrowing among these countries. Ukraine, Kazakstan, Belarus, Uzbekistan and Georgia accounted for 84% of that and the other nine countries had smaller loan portfolios. The external debts of this group of countries continued to grow in 1994.

    In Central Europe and Central Asia, the net flow on debt rose by 7% in 1993. The net flows on all debts (including short-term and long-term International Monetary Fund (IMF) credits) rose significantly in Hungary but there was a sharp decline in the net inflows of debt to Russia, where flows fell to $3.4 billion in 1993 from $11.4 billion in 1992. In 1993, the accumulated interest arrears also fell by $1.9 billion in Russia but increased by $200 million in former Yugoslavia. Also, interest payments were rescheduled amounting to $3.5 billion for Russia and $2 billion for Poland in 1993. Under the Paris Club agreement in 1994, the restructuring of Poland's debt that had been negotiated in 1991 was concluded. This agreement provided for a 50% cancellation of the stock of debt or a 50% reduction in scheduled debt service on a net present value basis. Poland received a reduction in its official debt to the U.S. by 70% on a net present value basis. During 1992-94, under debt restructuring arrangements, debts of Albania and Bulgaria were significantly reduced. For Russia, debt amounts rescheduled in the Paris Club were $15 billion in 1993 (including $1.1 billion in U.S. debt) and $7.1 billion in 1994 (including $901 million in U.S. debt). In October 1994, Russia reached agreement with its creditors for restructuring commercial bank debts, but financial terms of the London Club rescheduling remain to be finalized.

    Although governments in much of Central Europe and the Former Soviet Union have made substantial efforts to attract foreign investments, the flow of foreign capital in the region has been limited and concentrated only in a few countries. The counterpart to the surges in capital flows in recent years has been a sharp increase in current account deficits in the Central Europe and NIS Regions. Thus, the magnitude of debt burden and capacity to serve it in time will prove significant factors in helping or hindering economic reform in the region. For example, for the NIS, debt service payments as a percent of total exports of goods and services increased from 12.6% in 1993 to 24.4% in 1994, and were expected to moderate to 17.1% in 1995. For Central Europe countries, debt service paymentsincreased from 14.2% in 1993 to 26.6% in 1994,and were expected to moderate to 18.2% in 1995. However, Russian debt payments increased from 3.7% in 1993 to 9.1% in 1994, and were expected to increase further to 11.7% in 1995. Similarly, the Caucasus and Central Asian countries' debt service payments jumped from 2% in 1993 to 4% in 1994, and were expected to jump to 6.2% in 1995. Actual 1995 statistics are not available at this writing.

    The United States provided an energy sector grant to Ukraine in late 1994, supporting a comprehensive sector reform program which was an important element in Ukraine reaching an agreement with the IMF on a systematic transformation facility loan. This balance of payments assistance was extraordinary in the USAID program because the magnitude of available resources, while enough to pay for significant technical assistance programs, is not large enough for debt relief across the region.

    FY 1997 PROGRAM

    USAID is pursuing three strategic goals in this region: economic restructuring, democratic transition and social stabilization. The first two strategic goals reflect directly U.S. national interest in the development of stable, market-oriented democracies. The third recognizes that social pain, including deteriorating social services, can undermine reform efforts and become an obstacle to comprehensive economic and political reform. Both the strategic goals and the 11 strategic objectives that fall under them are described below.

    Economic Restructuring

    USAID proposes $147,550,000 for SEED and $280,600,000 for FSA funds under this strategic goal to foster the emergence of a competitive, market-oriented economy in which the majority of economic resources is privately owned and managed.

    To achieve this goal, USAID undertakes activities aimed at systemic reform - laws, policies, institutions, information flows - which are fundamental to free enterprise and private markets. Among the activities USAID supports are: policy, legislative and regulatory reforms to facilitate and provide confidence in privatization and permit business to operate; privatization and post-privatization assistance; capital markets development; better alignment of revenue policies and budget allocation with economic objectives; modernization of tax codes and systems; establishment of commercial law and regulatory procedures on such topics as formation and governance of corporations and partnerships; contract law, demonopolization and bankruptcy; development of small and medium-sized enterprises; establishment of efficient, well regulated private banking operations, energy conservation measures in heat and power plants, and restructuring of energy pricing and delivery systems.

    Specific strategic objectives are: increased transfer of state-owned assets to the private sector (enterprises, land, housing stock, financial institutions and utilities, to private ownership and management); sound fiscal policies and fiscal management practices; accelerated development and growth of private enterprises; a more competitive and market-responsive private financial sector; and a more economically sound and environmentally sustainable energy system.

    Democratic Transition

    USAID proposes $54,325,000 for SEED and $66,300,000 for FSA funds under this strategic goal to support the transition to transparent and accountable governance and the empowerment of citizens through democratic political processes and freedom of information.

    To achieve this goal, systemic change to facilitate participation, information flows and the rule of law are key. Among the activities USAID supports are: strengthening of political parties and support of free and fair elections; development of independent, responsible media; strengthening of parliamentaryprocesses and establishment of laws and regulations to enhance local government authority, development of an independent judiciary to allow changes in legal procedures and the capacity of judicial systems to operate independently and effectively. USAID helps strengthen thousands of NGOs which now serve advocacy functions for ordinary citizens and help open up the political process.

    Specific strategic objectives are: increased, better-informed citizens' participation in political and economic decision-making; legal systems that better support democratic processes and market reforms; and more effective, responsive, and accountable local government.
    Social Stabilization

    USAID proposes $15,650,000 for SEED and $116,950,000 for FSA funds under this strategic goal to respond to humanitarian crises and strengthens the capacity to manage the human dimension of the transition to democracy.

    This goal aims to help governments address the problem of deteriorating services and contain the "backlash" against economic reform. USAID provides targeted technical assistance to reform social protection systems. Rather than universal, but unaffordable subsidies for a wide range of services, countries are moving to fee-based systems for those who can afford to pay, coupled with targeted subsidies for the most vulnerable groups. Reforms which develop incentives for an enlarged private sector role in service delivery and financing also will reduce the public burden.

    In some strife-torn areas such as Bosnia, the Caucasus and Tajikistan, humanitarian assistance remains important.

    Activities USAID is pursuing include: emergency supply of medicines, vaccines and medical equipment; increased reliance on alternative modes of health care provision and financing, moving to market-based rents and maintenance systems for housing; and improvement of operational safety at nuclear power plants and effectiveness of nuclear regulatory bodies.

    Specific strategic objectives are: reduced human suffering and crisis impact, improved sustainability of social benefits and services, and reduced environmental risks to public health .

    Cross-cutting and Special Initiatives

    USAID proposes $257,475,000 for SEED and $176,150,000 for FSA funds under cross-cutting and special initiatives for the following types of programs: (1) activities that do not contribute directly to the strategic objectives, but nevertheless serve strong Administration or Congressional interests or address an extraordinary circumstance requiring USAID assistance in a particular country; (2) activitiesthat relate directly to a particular objective, but are too limited in scope or impact to be designated a strategic objective in the country program; and (3) cross-cutting activities that contribute to more than one strategic objective. Examples of cross-cutting and special initiatives are the Bosnia program and training activities.

    Economic Support Funds (ESF), Development Assistance Funds (DA) and P.L. 480 Title II Funds

    The Administration proposes $94,600,000 for ESF, $5,700,000 for DA and $25,000,000 for P.L. 480 funds. Of these amounts the Administration requests $60,000,000 in ESF and $5,700,000 in DA Funds for Turkey; $19,600,000 in ESF for Ireland; $15,000,000 in ESF for Cyprus; and $25,000,000 in P.L. 480 for Bosnia.

    In Turkey, the ESF funds are used primarily to advance the significant economic restructuring measures being undertaken by the Government of Turkey, while the DA funding supports U.S. and indigenous NGO efforts to improve women's health through improved family planning.

    In Northern Ireland and the Republic of Ireland, ESF funds will be used to contribute to the International Fund for Ireland (IFI) to support the Northern Ireland peace process. Economic assistance at the community level has been identified as the most effective means to break the cycle. The objectives of the IFI are to promote economic and social advancement and to encourage contact, dialogue, and reconciliation between Nationalists and Unionists. The IFI seeks to reach these objectives by supporting and promoting social reconciliation through economic development in Ireland and Northern Ireland, with priority given to new investments that create jobs and reconstruct disadvantaged areas.

    In Cyprus, $10 million will be used to support bi-communal activities in sectors such as sanitation, rehabilitation of the handicapped; forestry; animal disease and pest control; environmental protection; health; water; and education. The remaining $5 million will be used to fund academic training at U.S. institutions for students from Cyprus as part of an effort to foster Cypriot development and bi-communal cooperation.

    In Bosnia, $25 million is planned for emergency food assistance.

    1/ The Department of State has changed the terminology used to refer to this region from Central and East Europe to "Central Europe."